You Can Pay a High Price for Neglecting Your Negotiating Skills

When a book packager offered Leslie Whitaker $12,400 in 1993 to ghostwrite “The Beardstown Ladies’ Common Sense Investment Guide: How We Beat the Stock Market and How You Can Too,” Whitaker leaped at the chance. Only when the book became a New York Times bestseller--then hovered on the list for three months--did Whitaker realize she blew a potentially lucrative deal.

“It just hits you in the face,” she said. “I was like, ‘Oh my God, you have got to learn how to negotiate.’ ”

The Oak Park, Ill., writer sought consolation from fellow scribe Elizabeth Austin. Austin confided that she, too, was a neophyte in the art of deal-making. She had her own horror story to tell.

Austin had become smitten with a house for sale and had quickly offered its full asking price. Later, she learned she’d paid 20% above market value.

“Doing homework [about a house’s worth] had seemed like a chore,” Austin said. “Negotiations made me so nervous, I’d just put it all out of my head. Or I’d think of worst-case scenarios.”

Whitaker and Austin decided to improve their deal-making skills by learning all they could about negotiating. They interviewed skilled deal makers, researched the topic and eventually wrote “The Good Girl’s Guide to Negotiating” (Little, Brown & Co., 2001). In the book’s introduction, Whitaker writes, “There’s nothing like making a bad deal to inspire you to do better the next time.”

Only a few pinstriped sharks love to negotiate tough deals. Yet everyone--employees, managers, entrepreneurs and job hunters--must bargain. Some people, however, become “negotia-phobes,” habitually avoiding conflict by quickly ceding to others’ demands.

“They think, ‘They’ll never give me what I want, so I won’t even ask for it,” said Ed Brodow, a Monterey, Calif.-based consultant and the author of “Negotiate with Confidence” (American Media Publishing, 1996).

Those with low self-esteem may spend their careers undervaluing their worth, accepting low salaries without complaint. People pleasers may sacrifice their own needs in order to win adversaries’ approval.

Yet negotiating need not be painful. It’s a skill that can be learned.

First, understand that negotiating is a business transaction. You mustn’t take it personally. Skilled deal makers understand this; they keep their emotions in check. This allows them to better assess their opponents’ position and strategize.

Before negotiations start, learn all you can about the organization and individual with whom you’ll be dealing. Investigate their needs, motivations, strengths, weaknesses and goals.

At the same time, do an honest self-assessment. How can you help them? What is your value to them? Why would you be the best person for this role?

“I call this the ‘Golden Rule of Negotiating,’ ” said Roger Volkema, associate professor of management at American University and author of “The Negotiation Toolkit: How to Get Exactly What You Want in Any Business or Personal Situation” (Amacom, 1999). “People will not negotiate with you unless they believe you can help them or hurt them.”

Keep in mind that statements of self-interest will weaken your position. For example, don’t tell an employer you need a $60,000 salary to support a large family or pay a hulking mortgage. Instead, demonstrate that your skills, experience and education more than qualify you for that compensation.

Consider role-playing with friends to strengthen your bargaining skills. During the first rehearsal, play yourself. This will help you clarify your goals. In a second rehearsal, be the other party. That may give you more insight into their needs and objectives and help you anticipate rebuttals and objections, Brodow said.

Look for opportunities in daily life to improve your negotiating tactics. Go to garage sales and ask for price reductions. At restaurants, order dishes not listed on the menu. Ask hotel reservation clerks to discount your room.

“Get in the habit of practicing, and it will become a part of who you are,” Brodow said.

These strategies will help you come to the bargaining table well-prepared.

To prepare for a negotiation, fantasize about your best-case scenario. Be specific. Do you want a $10,000-a-year raise? Would you like to work at home on Fridays? Make a list of the elements in your best-case scenario, then prioritize them, Brodow said. This way, should you later have to make concessions, you’ll be less likely to impulsively abandon what’s most important to you.

“The more committed you are to your objectives, the more powerful you’ll be when you’re negotiating,” Brodow said.

Also establish in advance three critical points: your BANTA, or Best Alternative to a Negotiated Agreement, your fallback position and your walk-away point.

You formulate a BANTA by arranging other attractive deals prior to the negotiation. For example, if you’re about to interview for a management job at a top local firm, try to generate offers from competitors prior to your meeting.

“If you don’t have alternatives going into the negotiations, it’s going to show. You won’t act with confidence,” Volkema said. And should the negotiations falter, you’ll have other options to explore.

Determine a fallback position. That’s the compromise you’re willing to make should the other party reject your best-case scenario. If your boss vetoes your request for a $10,000 raise, be ready with a fallback position: Can she give you a $5,000 raise? Or perhaps a one-time bonus?

Last, decide upon your walk-away point.

“Know the point where it’s no longer acceptable to stay in the negotiation,” said Susan Onaitis of Global Learning Link, who wrote “Negotiate Like the Big Guys: How Small and Mid-Size Companies Can Balance the Power in Dealing with Corporate Giants” (Silver Lake Publishing, 1999). “If you don’t have a bottom line, you’ll keep dropping.”

Shy and anxious negotiators should jot down their goals, BANTA, fallback and walk-away positions and take the notes into the meeting, Onaitis said. Should they become flustered, they can refer to the written material to regain focus.

If possible, choose a favorable time and place for your negotiation. Arrive early to familiarize yourself with the surroundings. Assume the posture of a confident person, even if you feel nervous, said Bill Lampton, president of Championship Communication in Gainesville, Ga.

When negotiations begin, let the other side do most of the talking. Many poor deals are made by individuals who explain too much and listen too little, said Richard Coughlan, assistant professor of management systems at the University of Richmond’s Robins School of Business.

Have the other party outline his position and summarize his needs. Listen actively by asking questions and rephrasing his statements, to be sure you understand. Meanwhile, reveal as little as possible about your own position. By doing this, you take control of the discussion.

Provoke the other party into making the first financial offer. For example, ask, “What is the salary range for this job?” Follow up with, “Is that the best you can do?”

“It’s a low-pressure way to get the other side to bargain against itself,” said Los Angeles-based attorney Mike Young, an adjunct professor at USC Law School who lectures on negotiation.

When you must state your own financial objectives, open with your best-case scenario. Remember, you can always accept less. Don’t hastily agree to the other party’s first offer. He’ll wonder whether you’re in desperate straits, and the bargaining power will shift back to him.

Avoid direct disagreements. Even in adversarial negotiations, don’t play “defend-and-attack,” hoping to verbally pound your opponent into submission. Even if you succeed, you’ll leave him with bad feelings and possibly a strong urge to renege on the agreement.

Experts suggest that you also refrain from lying and exaggerating to bolster your position. Don’t make up phony job offers when you have none. Don’t pretend you’re earning thousands more than you make. Your fabrications may be discovered and will hurt you in the long run.

Be alert to dodgy tactics the other party may take to weaken your position. He may play powerless, claiming a supervisor must approve the deal, or a written rule prohibits your request. Don’t back down. Instead, tell the person you’ll only negotiate further with someone who has the authority to move the deal forward and make an exception to the company rule. Remember: Just because something is in writing doesn’t make it eternal law, said Merle Strangway, president of the Learning Edge in Athens, Ga.

Don’t rush to conclude delicate negotiations. You might get sloppy about meeting your needs. About 80% of concessions are made during the last 20% of negotiations, Strangway said. If you’re overwhelmed by the day’s discussions, ask for time to mull over your options, Onaitis said.

When dealing with experienced bargainers such as human resources representatives who engage in scores of similar negotiations, consider doing a “pattern interrupt.”

Gain their attention and respect by presenting yourself quite differently from other applicants, said Joel Block, chief executive of Sharefax Corp., a business development firm in Agoura Hills. But if you believe you’ll be up against a truly powerful deal maker who’s likely to overwhelm you, consider hiring an agent to represent you in the negotiations, Volkema said.

View each new bargaining situation as an opportunity to improve your negotiating skills. This is what authors Whitaker and Austin do.

“I am much stronger and more thoughtful now,” Austin said. Recently, she negotiated a sweet deal for a new Mazda MPV van: $3,000 below its sticker price, with 2.8% financing.

“Every time I do this, I get a little better at it,” she said.